100% FDI gets green light for rly line projects

Foreign direct investment is set to flow into the building of “fixed railway infrastructure” (read railway lines), ending a long-preserved policy of allowing only Indian Railways to set up these facilities out of its internal accruals or budgetary and other support.

Private investors, ports, export/import companies, “other investors” and FDI will now be allowed in the railway lines meant to connect ports, industrial and logistical parks, and mines with other parts of the country. The railways will either award these projects (construction and maintenance) on nomination basis or select the investor through competitive bidding. A revenue-sharing model has already been worked out.

The move is expected to give a boost to a sector where infrastructure expansion will provide direct, tangible benefits to the economy. Currently, the PPP model in the railway sector is at a takeoff stage, with large domestic investments coming in a few areas or projects, including the Mumbai elevated rail corridor, private freight terminals and a slice of the eastern segment of the dedicated freight corridor. However, no FDI is allowed in these PPP projects and is limited to only manufacture of components.

Under a new policy for participative models in rail connectivity and capacity augmentation projects notified by the railway ministry, 100% FDI has been permitted under the approval (FIPB) route “for the development of first- and last-mile connectivity projects at either end of the rail transportation chain providing connectivity to ports, large mines, logistics parks”.

Under the policy, the railways will soon invite expression of interest from prospective investors.

“It is applicable to any kind of goods traffic. These railway lines will be operated on the ‘common carrier’ principle for public transportation of goods. The railway connectivity will be developed on private land and it will be a non-government railway project,” according to the policy.

Besides, funds for the project will be fully mobilised by the project proponent without any participation by the railways. “The policy envisages financial participation of the project proponent in the development and creation of rail infrastructure for providing first- or last-mile connectivity under an agreement with the ministry either on its own or as a joint venture with the infrastructure financing and development institutions,” said a railway ministry official.

Despite acute shortage of funds, railways have refrained from allowing FDI in their core areas and allow it, through the automatic route, only in the manufacture of components by private companies. Between 2000 and 2012, total FDI into the railways was Rs 1,354.65 crore, according to the Department of Industrial Policy and Promotion.

The new policy also allows state governments, local bodies, cooperative societies and other corporate bodies, including the overseas corporate bodies, to invest in fixed rail infrastructure projects.

“Land for the line will be acquired by the project developer to provide connectivity with the main railway system. The railway land for providing connectivity may also be made available on lease/licence under the extant policy. However, in such cases commercial utilisation of the railway land for purposes other than for the project will not be permissible,” said a senior railway board officer.

Under the model, the concessionaire would build lines and maintain them while the railways will have joint and equal right to use the infrastructure to ferry goods. Commercial activities related to freight handling and train operations at the terminal will be conducted by the railways, and their cost will be borne by the non-government railway.

“We are expecting an encouraging response from the foreign and domestic players. It was very necessary for the railways to open the doors for the private sector in core areas. It has been estimated by the Sam Pitroda committee on modernisation that the railways need to invest R7,35,000 crore in the next five years to match the growth rate of the Indian economy,” the official added.


Banking services at railway stations

In order to make its banking transactions more secure, the Bangalore Division of South Western Railways has floated tenders inviting nationalised banks to provide door-step banking services at railway stations.

Senior Divisional Commercial Manager N Ramesh said, “We are spending around `2 lakh every month to remit money safely to the banks. With the permission of the Railway Board, we had invited tenders in accordance with the Reserve Bank of India guidelines. State Bank of India has offered to provide door-step banking at Bangalore and a few other stations, but Axis Bank has come forward to provide services throughout the division. We might award the tender to one of these banks in the near future.”

Ramesh said the bank which came forward to provide banking services would collect the money remitted by 144 booking units, including the 108 railway stations in the division. The bank would have the liberty of keeping the money for two days before remitting it to the railways account, he said.

The railways had engaged three vans and employed six security personnel from the Railway Protection Force, six staff members from railways accounts department and drivers to transport the cash, he said.

Ramesh said some more banking services could be included into door-step banking for the benefit of the passengers in future.


Misuse of return tickets by suburban commuters costs railways dear

The rampant misuse of return tickets by suburban commuters has rattled the railway authorities. On the Mumbai suburban section of both Central and Western railway the return journey tickets are valid for the next day or two days if the next day is a holiday or a Sunday. Although as per the rules, the return journey is to be made only once, commuters often use it twice. For instance if a commuter takes a return journey ticket, he/she uses the same on day one and the next day as well. For the second day, commuters only buy a single journey ticket and uses the previous day’s return journey ticket on the way back. This practice is causing major losses to the railways.

Ticket checkers on duty say they always see many people returning the same day. Again the next day, when they checked , they found the same return journey ticket, checked one day before.

A ticket checker on duty in at a station said, “Many times, I checked commuters and see return ticket and the next day, I saw the person at the same station from where he started travelling, purchasing a single journey ticket.”

In suburban section of Mumbai, daily 4,86,087 commuters buy 2, 39,860 return tickets on Western Railway and while on Central Railway 4,61, 235 commuters purchase 2,33,318 return tickets daily.

In Mumbai suburban section of Western railway, 36.21 lakh commuters travel daily. Out of these 24.76 lakh are season tickets holders. While 10.47 card tickets are sold daily. Per day, total earning is 1.67 crore.

While in suburban section of central railway, 38,02,106 commuters purchase 8, 36,118 tickets. Out of this, 11,49,170 commuters buy 7,91,703 card tickets. As many as 26,52,936 season pass holders purchase 44,415 tickets. Total earning is Rs 1,76,15,742/ per day.

In suburban section of Mumbai, daily 4,86,087 commuters buy 2, 39,860 return tickets on Western Railway and while on Central Railway 4,61, 235 commuters purchase 2,33,318 return tickets daily.

In Mumbai suburban section of Western railway, 36.21 lakh commuters travel daily. Out of these 24.76 lakh are season tickets holders. While 10.47 card tickets are sold daily. Per day, total earning is 1.67 crore.

While in suburban section of central railway, 38,02,106 commuters purchase 8, 36,118 tickets. Out of this, 11,49,170 commuters buy 7,91,703 card tickets. As many as 26,52,936 season pass holders purchase 44,415 tickets. Total earning is Rs 1,76,15,742 per day.


2012 – A tough year for cash strapped Indian Railways.

Cash-strapped railways faced a tough year financially which was compounded by indecisions and policy delays as the national transporter witnessed four ministerial changes because of political compulsions.

While the Railway Ministry came to the Congress fold after a gap of about a decade-and-a-half after the withdrawal of Trinamool Congress support to UPA, the government looks set for a hike in passenger fares, which had remained stagnant over the years.

The railways witnessed a widening gap between operational cost and passenger earnings while freight revenue also fell below the target in 2012. Railways earned Rs 67,879.95 crore till October as against the target of Rs 70,147.74 crore, 3.23 per cent less than the budgeted provision.

In view of this shortfall, the plan outlay for the current fiscal has been downgraded from Rs 60,100 crore to Rs 55,881 crore.

Currently, the railways have 347 ongoing projects for new lines, gauge conversion and doubling but shortage of funds has forced curtailing of allocations for majority of them.

The year witnessed commissioning of the much-delayed Rae Bareli coach factory. Besides the factory, the railways also announced setting up of a wheel factory at Congress President Sonia Gandhi’s constituency.

The year began with Railway Minister Dinesh Trivedi proposing about 15 per cent passenger fare hike in the Rail Budget. However, it was rolled back as Trivedi drew the wrath of Trinamool supremo Mamata Banerjee.

Trivedi was aiming to mop up about Rs 4000 crore from the fare hike. He was, however, replaced by Banerjee loyalist Mukul Roy, who remained mostly absent from the ministry and ran the key infrastructure department for nearly seven months from Kolkata.

Though many West Bengal-centric projects including Kanchrapara rail factory, beautification of stations and opening of passenger reservation centres in the state were initiated during Roy’s regime, the much-needed move to hike passenger tariff was put in the back-burner.

After the withdrawal of Trinamool support in September, Congress’ C P Joshi was given additional charge of the ministry for about a month. His brief tenure saw the revival of the proposal for setting up of Rail Tariff Authority (RTA) to suggest tariff hike in passenger and freight rates.

Pawan Kumar Bansal, who became the fourth minister in a year to occupy the Rail Bhavan, has been giving ample hints of raising the fares realising the dire financial needs of the national transporter.

“If passenger fares will be hiked then it will not be for the sake of raising fares, it will be done to improve passenger amenities,” he had said after taking over in October.

Both ministers of State for Railways – Adhir Ranjan Chowdhury and K J Suryaparakash Reddy – have also strongly advocated raising of passenger fares to generate funds.

Reviewing the performance, Prime Minister Manmohan Singh has asked the railways to expedite the process of setting up the Rail Tariff Authority.

Singh has also asked the ministry to finalise bidding documents for two big ticket projects – locomotive factories at Madhepura and Marhora in Bihar.

Though seven routes have been identified for undertaking feasibility survey for running bullet trains at 300 kms per hour speed, the Mumbai-Ahmedabad route is to be taken up by the railways as a priority.


Railways to invest Rs 5 lakh cr during 12th five year plan

The railways plan to invest Rs 5 lakh crore in capacity addition during the 12 Five-Year Plan (2012-17), according to a senior official of the Indian Railway Finance Corp, the financing arm of the state-run enterprise.

About a fifth of this corpus, which is a substantial jump from the 11th Plan’s expenditure target of 1.09 lakh crore, will be raised by IRFC through market borrowings while the rest will come through budgetary support, internal revenues and the public-private partnerships, the official said.

IRFC’s market borrowing plan includes issuance of tax-free bonds worth about 10,000 crore by end of January, the official added.

“To financially boost its infrastructure development plans, the railways will have to raise money from the market, given the internal resources add a meager percent to its revenues,” the official said. Cash-strapped Indian Railways, which manages the world’s third largest rail network, is keen on attracting private investment as it does not generate enough funds to finance its development plans.

Revenue shortfall has already forced it to cut plan outlay for the current fiscal to Rs 55,881 crore from the Rs 60,100 crore targeted earlier.

“For capacity addition, railways can’t depend solely on internal resources or market borrowings, it’ll have to invite private partners,” a railway official said.

To facilitate this, the Cabinet Committee on Infrastructure recently approved a policy on participative models for rail connectivity and capacity augmentation, in line with the railways’ internal policy document.

“The ministry of railways wishes to attract private capital for accelerated construction of fixed rail infrastructure. For this, it has formulated participative investment models for its existing shelf of projects and also for new ones,” the policy document said.

The modes suggested to route private investment in fixed rail infrastructure are non-government railway model, joint ventures, execution of projects through the build, operate, transfer mode, capacity augmentation, and state government projects.

“This kind of policy is welcome but a confidence building measure is required. Given the unsuccessful past experience with private partners, the private confidence in railways is not high,” said Vinayak Chatterjee, chairman of Feedback Infra.

Indian Railways transports 2.65 million tonne of freight and 23 million passengers every day.


Published in: on December 29, 2012 at 8:06 am  Leave a Comment  
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Railways ties up funds at zonal levels for 360 pending projects

With the Ministry of Railways back with the Congress after 16 years, a fresh wave of change is sweeping through the ministry.

For the first time, the railways has prioritised its 360 pending projects worth about Rs 4 lakh crore and tied up funds with them at zonal levels.

The ministry is also cautious about spending this time, as for the first time in a decade or so, it did not go for any supplementary demand for grants in the monsoon and winter sessions of Parliament.

“The railway is right now focusing on the existing projects. We have tied up funds for works at zonal levels and the power to reappropriate funds from one work to another vest with the board now in contrast to the zones earlier,” a senior railway ministry official told Business Standard.

“We also did not go for any supplementary demand for grants during the parliamentary session as the intention was to focus our resources on the budgeted works rather than starting new works.”

The railways, which went for a freight hike of 20-25 per cent in March 2012, is expecting a surplus of around Rs 12,000 crore.

The targeted annual Plan outlay of around Rs 60,100 crore in 2012-13 is expected to be financed by gross budgetary support of Rs 24,000 crore, internal resources of Rs 18,050 crore, extra budgetary resources of Rs 16,050 crore and railways safety fund of Rs 2,000 crore.

The funds raised by Indian Railways Finance Corp (IRFC) are totally dedicated to buy rolling stock.

In 2011-12, the railways invested these funds for project financing. But now, it is investing money on assets that have sure shot returns. The rolling stock being the only asset which starts generating money from the first day is the safest bet in contrast to long gestation period projects.

Among the key works under plan are: New lines, gauge conversion, track renewals, signaling and telecommunication and rolling stock. All the planned expenditure is dedicated on this. Among the key budgeted non-planned expenditure in 2012-13 are: 37 per cent on staff salaries, 16 per cent on pension funds and 17 per cent on fuel charges.


Railways to hike passenger fare by 5 to 10 paise per km

Faced with mounting deficit of over Rs 20,000 crore in the passenger segment, Railways is keen on raising passenger fares between 5—10 paise per km in the coming months to generate about Rs 4,000 crore revenue.

Reviewing the performance of Railways, the Prime Minister’s Office has asked the Chairman Railway Board to finalise and submit its recommendations on the constitution of proposed Rail Tariff Authority (RTA) by December 31.PTI


Food on trains, stations to cost 50-100 per cent more

Food on trains and railway stations will finally be costlier. Prices have gone up by between 50 and 100 per cent for all meals, tea and coffee sold by licenced vendors. The new prices will be effective immediately.

The price of food served on the Rajdhanis and Shatabdis, which is included in the price of the ticket, will be raised next year when fares are likely to go up, and new catering contracts are awarded.

Rail Neer, the packaged drinking water sold on trains and stations, became costlier earlier this month.

The Indian Express reported the impending increase in the price of food on trains and stations on November 2 and December 8. Prices had remained unchanged for nearly a decade, and vendors have repeatedly pleaded that business was not sustainable at 2003 prices. Quality and quantity have suffered, leading to frequent complaints.

Railway Minister Pawan Kumar Bansal identified financial reform in the Railways as his priority almost as soon as he took charge. Passenger fares are expected to be next.

A service tax of 8.66 per cent has been built into the new prices, and the ministry has directed all zonal railways to display the rates prominently inside coaches. It is now mandatory to serve seasonal vegetables, which are fresh and cheaper to procure. “We have also directed in the new order that the menu should not be same for lunch and dinner and should be rotated through the days of the week,” a senior official said.

Meals and breakfast, tea and coffee, and other items served on mail and express trains will cost between 50 per cent and 90 per cent more.

Tea and coffee will cost Rs 5 and Rs 7 per cup respectively, up from Rs 3 and Rs 4 now. Breakfast will cost Rs 30, up from Rs 17 now. The price of the frugal Janta meal, now Rs 10, has gone up 100 per cent.


Published in: on December 29, 2012 at 7:42 am  Leave a Comment  
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Railway Ministry to decide soon on Tariff Regulatory Authority

The Railway Ministry is likely to take a decision soon to set up Rail Tariff Regulatory Authority (RTRA) to suggest tariff hike in passenger and freight fare, Minister of State for Railways Adhir Ranjan Chowdhury said on Wednesday.

“Modalities for such a body (RTRA) including its composition, role and responsibility are being evaluated at an inter-ministerial group”, Chowdhury told reporters in Raipur on Wednesday.

“The Ministry has proposed to set up Railway Tariff Regulatory Authority for regulating inter-alia the tariff structure of the Railways. It is under discussion of inter ministerial group and a decision on it will be taken soon,” he said.

Admitting that rail ministry is running a loss of over Rs 20,000 crore, Adhir Ranjan Chowdhury said, the ministry has come to the Congress after 16 years.

Chowdhury also said that Chhattisgarh, with its rich reserve of iron ore and mineral deposits,will play a prominent role in country’s industrialisation in the future. “Chhattisgarh is popularly known for its mineral reserve, particularly of iron ore and it will play a prominent role in country’s industrial map in future,” Chowdhury said.

Referring to the mega rail projects ongoing in the state, he said the Centre will help Chhattisgarh in every way to strengthen rail connectivity and augmenting the capacity too.

“Whatever is the demand of state, it can convey to us. We will try our best to accomplish them,” he added.

Admitting that rail ministry is running a loss of over Rs 20,000 crore, Chowdhury said, the ministry has come to the Congress after 16 years. Railways was virtually “regionalised” in this period of time and now we are turning it into a “national entity” again, he said.

The minister said though no new project is coming up in the state, the focus is on expediting the sanctioned ones including industrial rail corridors and the 235-km Dalli Rajhara-Jagdalpur rail link via Rowghat in Bastar.


Tatkal booking process streamlined

Railway officials say the organization has taken several measures to prevent touts cornering berths at passenger reservation system (PRS) centres. They also say that improvements have been made to the website of the Indian Railway Catering and Tourism Corporation (IRCTC).

“Under a new system, tatkal tickets will be sold between 10am and noon,” said a railway officer. “No authorized agents, including those of the IRCTC, will be allowed to book tatkal tickets in this period the counter or online.”

He said booking periods have been segregated to ensure that reservation queues for the opening date (120 days before the date of journey) do not clash with tatkal dates. “On the IRCT website, individual users are now permitted to book only two tickets from 10am to noon. Also, only two tickets can be booked from a particular IP address in this period.”

A few days ago, Western Railway introduced the concept of self tatkal ticket counters, where a person can book tatkal tickets only for himself or if he is part of a travelling party. WR has also made photo identity cards compulsory at PRS centres for those who seek to make bookings under the tatkal scheme. “If someone is not travelling himself, but booking tickets on somebody else’s behalf, he would have to bring a self-attested photocopy of the ID of the person for whom the booking would be done,” a railway official said.

The railways is also planning to introduce biometric technology in three months in the Mumbai division, again to bar touts. To cater to demand during summer holidays, Central Railway has decided to regulate post-midnight queues outside all PRS centres.